Another interesting insight when using data from Jan. 1977 is in this chart. This compares the deviation of the Case Shiller price from the XValue:
What I notice in this chart is that in 1980-1983, when interest rates were so high (mid teens!) prices people were paying were way above what we would expect based on the XValue. But we don’t think of that time as a bubble, because within a couple years interest rates had started their long march downward, and so people could refinance out of the high rates. Also, during the next few years prices didn’t grow much. So, I wouldn’t call it a bubble, since it never popped.
Which tells me, that just because prices go way above the XValue, we shouldn’t assume we are in a bubble. If it is followed by a period of lowering rates the XValue could increase rather than prices collapse.